Automattic Connection: How an East Coast VC Got Behind WordPress, the West Coast’s Hottest Blog Platform

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(Mullenweg aspired to be a jazz saxophonist) and his business and technical acumen (or maybe it’s the unique combination of them), Hirshland describes an “intangible thing that separates him from your run-of-the-mill entrepreneur.”

Mullenweg, it turned out, had started WordPress in his native Houston, then moved west to work for CNET in San Francisco while still developing the blogging software during evenings and weekends. And, at some point (the exact timing is a bit unclear to me), he had convinced a small group of colleagues to join what he describes on his own blog as a company with “almost no money in the bank run by someone with no experience, and whose core idea was to give away and open source all our core IP.”

When Hirshland met Mullenweg, the young Texan was not exactly adept in the world of finance and investment. “I don’t think he knew what venture capital was,” says Hirshland. But it didn’t take much for Hirshland to decide he wanted to invest—if and when Mullenweg changed his mind.

Which brings us to the party in the spring of 2005. “I was in Matt’s apartment,” Hirshland recalls. “He was having a little party for the 1.5 release of WordPress. Let me tell you, this was a pretty geeky party.” (Yeah, I stole his line in the lead.) That’s when he spotted the clicker, which as I might also have paraphrased, was “the thing that clicked for me.”

There were just a couple of problems. One was that it was still hard to see how giving away blogging software was a valuable business proposition. Another was that Mullenweg, whom Hirshland describes as a very deliberate guy, wasn’t too interested in venture capital. It wasn’t until that September that he agreed to a small Series A round that brought in about $1.1 million in seed funding and gave him the cash to hire some extra people. Polaris took the lead, putting in $500,000, and behind it came a collection of smaller investors: Phil Black (then at Blacksmith Capital and now at True Ventures, a venture fund he raised later); two former Kleiner Perkins Caulfield & Byers partners, Doug Mackenzie and Kevin Compton, who call themselves Radar Partners; and Shelby Bonnie, a co-founder of CNET. The only other organizational investor besides Polaris was CNET itself, which put in what Hirshland calls a “teensy bit.”

Even then, no one had a lock on the business potential of WordPress. “It was very unclear,” Hirshland says. “I think we all went into the post-Series A funding [viewing it] as an agreed-upon experiment.”

But good things were clearly happening. About a year before the deal was put together, Malik had introduced Matt to Toni Schneider, right around the time Schneider sold his company, Oddpost, to Yahoo (where it became the essence of a new version of Yahoo Mail). Schneider, who had gone on to become VP of the Yahoo Developer Network, related well to the ecosystem of open-source programmers around WordPress, and to Mullenweg. “We went into the funding with high hopes that Toni would end up getting involved,” says Hirshland. And, sure enough, shortly after the deal closed, Schneider joined as CEO (he is also now a venture partner at Black’s firm, True Ventures).

“We were pretty lucky very early on to have a partner for Matt,” is how Hirshland puts it. “And the other great thing,” notes Hirshland, “was Matt had this farm team of the hundreds of developers around the world who were working on WordPress already. It was a great feeder system for the company from an engineering perspective.”

Part and parcel with the funding round, Mullenweg named his company Automattic. Use of WordPress continued to boom. “It was amazing just to watch the momentum,” says Hirshland. He praises Mullenweg and Schneider for not … Next Page »

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26 responses to “Automattic Connection: How an East Coast VC Got Behind WordPress, the West Coast’s Hottest Blog Platform”

  1. Jeffro2pt0 says:

    Just wanted to say that this was an interesting piece to read. A nice overview of how Matt and company got from point A to point B. I also learned some things I didn’t know such as the select WordPress.com pages advertising campaign.

    If Automattic can make more acquisitions that were as good as a much for the company as Gravatars was, the sky becomes the limit for Automattic.

  2. David says:

    This is a fabulous article, and an interesting story to boot, with some great sidebars on east vs west, etc… I think it’s going to make a fascinating Harvard B-School Case. Of course, funding isn’t everything, as a couple of well endowed local companies recently realized — one tanked and the other sold out leaving the investors “under water”. I didn’t notice stories in the Xconomy updates, but no need to rub salt on the wounds. Let’s hope Automattic executes well, and maybe they will also open an office in Kendall Square alongside Microsoft, Google, Yahoo!, et al:)

  3. Toni says:

    “As the deal was being put together, Tony Conrad introduced Matt and Mike to Toni Schneider”

    Not that it matters hugely, but for accuracy’s sake I was introduced to Matt by Om Malik in summer 2004, about a year before Automattic raised it’s first money.

  4. Toni

    Thanks for the clarification. I have corrected this.

  5. Mike says:

    Great story, great article. I am constantly amazed by Matt’s levelheaded approach to fleshing out Automattic and his interesting view on commonly problematic issues, such as advertising. I look forward to seeing what Automattic has up their sleeves in the future.

  6. Very enjoyable read. I have no doubt that there are great things in store from WP and Automattic. He has so many great qualities, refreshing to know Web Entrepeneurs like Matt exist.

  7. Thanks for the article, it was a good read indeed

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